SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: JUNE 25, 1999
ATLAS ENVIRONMENTAL, INC.
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(Exact name of registrant as specified in charter)
COLORADO 0-26166 841140790
- ---------------------------- ------------ -----------------
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
15400 LOXAHATCHEE ROAD
PARKLAND, FLORIDA 33076
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (561) 451-0909
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 14, 1997, Atlas Environmental, Inc. ("Atlas") and its
subsidiaries, South Florida Thermal Services, Inc., Florida Specialized
Carriers, Inc., Kleensoil International, Inc., Transoil, Inc., Waste Magic
Recyclers, Inc., Waste Magic Recyclers Palm Beach, Inc., Waste Magic Recyclers
Central, Inc., Homestead Landfill & Recycling Mgmt. Co., Naples Recycling
Resources, Inc., South Florida Recovery, Inc. and Royal Crown Carting, Inc.
(collectively, the "Subsidiaries"), filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of Florida, Fort Lauderdale Division (the
"Bankruptcy Court"), Case No. 97-20203-BKC-RBR through and inclusive of Case No.
97-20214-BKC-RBR.
On October 16, 1998 the Bankruptcy Court directed the appointment of a
Chapter 11 Trustee for Atlas and the Subsidiaries. On October 20, 1998 the
Bankruptcy Court approved the appointment of Soneet R. Kapila (the "Trustee") as
Chapter 11 Trustee for Atlas and clarified the appointment, on November 17,
1998, to include the Subsidiaries. Soneet Kapila has retained Holland & Knight,
LLP to represent him in the jointly administered cases.
On April 19, 1999, the Trustee filed a motion to sell substantially all of the
assets of Atlas and the Subsidiaries based upon his receipt of an offer to
purchase of the same date executed by J.R. Capital Corporation. Thereafter, on
May 14, 1999, the Trustee, on behalf of Atlas and the Subsidiaries, entered into
an Asset Purchase Agreement (the "Asset Purchase Agreement") with J.R. Capital
Corporation and its subsidiaries, Atlas-Homestead, Inc., Atlas-Naples, Inc.,
Atlas-Lox Road, Inc., Atlas-Riviera, Inc., Atlas-Transoil, Inc., Atlas-Davie,
Inc., and Royal Crown, Inc. (collectively "J.R. Capital") to sell substantially
all of the assets of Atlas and the Subsidiaries to J.R. Capital. Pursuant to the
terms of the Agreement, the assets to be acquired by J.R. Capital include: (i)
accounts receivable outstanding as of the closing date (other than accounts
receivable due from WasteMasters, Inc. or any affiliate); (ii) automotive
vehicles; (iii) real property; (iv) machinery and equipment; (v) executory
contracts and permits, to the extent assignable; (vi) certain claims and causes
of action and proceeds therefrom; and (vii) other personal property of any kind
or nature.
On June 23, 1999, the Bankruptcy Court citing 11 U.S.C. ss.363, entered
an order approving the sale of substantially all of the assets of Atlas and the
Subsidiaries pursuant to the terms of the Asset Purchase Agreement. On June 25,
1999, the Trustee, on behalf of Atlas and the Subsidiaries, completed the sale
of substantially all of the assets to J.R. Capital. The consideration ultimately
paid for substantially all the assets was $23,500,000. The Asset Purchase
Agreement provided for base consideration of $22,402,000, which was subject to
upward or downward adjustment depending upon the amount of BNY Financial
Corporation's ("BNYFC") allowed secured claim against Atlas and the Subsidiaries
in the Chapter 11 bankruptcy proceedings as of the closing date. The
consideration was determined by negotiations among the parties. Proceeds of the
sale will be used to satisfy BNYFC's secured claim against Atlas and the
Subsidiaries in full. Also, as part of the consideration received from the sale,
BNYFC agreed to finance a $2.0 million contribution fund for the bankruptcy
estates to pay various classes of creditors (the "Contribution Fund").
The assets of Atlas now consist primarily of the Contribution Fund and
potential recoveries from litigation against third parties. At this time the
Trustee is considering either obtaining confirmation of a plan of liquidation or
reorganization, or converting the bankruptcy cases to a Chapter 7 liquidation
proceeding. In either case, the Trustee does not anticipate that there will be
funds available to permit any distribution to holders of Atlas' equity
securities.
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The above description of the Asset Purchase Agreement does not purport
to be complete and is qualified in its entirety by the full text of such
document which is attached as an Exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2 Asset Purchase Agreement, dated May 14, 1999, by and
among Atlas Environmental, Inc., South Florida
Thermal Services, Inc., Florida Specialized Carriers,
Inc., Kleensoil Int'l, Inc., Transoil, Inc., Waste
Magic Recyclers, Inc., Waste Magic Recyclers Palm
Beach, Inc., Waste Magic Recyclers Central, Inc.,
Homestead Landfill & Recycling Mgmt. Co., Naples
Recycling Resources, Inc., South Florida Recovery,
Inc. and Royal Crown Carting, Inc. and Soneet R.
Kapila, as Trustee and J.R. Capital Corp.,
Atlas-Homestead, Inc., Atlas-Naples, Inc., Atlas-Lox
Road, Inc., Atlas-Riviera, Inc., Atlas-Transoil,
Inc., Atlas-Davie, Inc. and Royal Crown, Inc. (Filed
without exhibits and schedules which will be
furnished supplementally to the Commission upon
request).
99 Order Authorizing the Chapter 11 Trustee to (I) Sell
Assets Free and Clear of Liens, Claims and
Encumbrances other than Tax Liens; (II) Assume and
Assign Executory Contracts, Unexpired Leases and
Permits; (III) Enter into Agreement with BNY
Financial Corporation and (IV) Enter into Agreement
with National Resource Recovery.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLAS ENVIRONMENTAL, INC.
By: /s/ SONEET R. KAPILA
--------------------------------
Soneet R. Kapila
Trustee in Bankruptcy
Dated: July 12, 1999
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2 Asset Purchase Agreement, dated May 14, 1999, by and
among Atlas Environmental, Inc., South Florida
Thermal Services, Inc., Florida Specialized Carriers,
Inc., Kleensoil Int'l, Inc., Transoil, Inc., Waste
Magic Recyclers, Inc., Waste Magic Recyclers Palm
Beach, Inc., Waste Magic Recyclers Central, Inc.,
Homestead Landfill & Recycling Mgmt. Co., Naples
Recycling Resources, Inc., South Florida Recovery,
Inc. and Royal Crown Carting, Inc. and Soneet R.
Kapila, as Trustee and J.R. Capital Corp.,
Atlas-Homestead, Inc., Atlas-Naples, Inc., Atlas-Lox
Road, Inc., Atlas-Riviera, Inc., Atlas-Transoil,
Inc., Atlas-Davie, Inc. and Royal Crown, Inc. (Filed
without exhibits and schedules which will be
furnished supplementally to the Commission upon
request).
99 Order Authorizing the Chapter 11 Trustee to (I) Sell
Assets Free and Clear of Liens, Claims and
Encumbrances other than Tax Liens; (II) Assume and
Assign Executory Contracts, Unexpired Leases and
Permits; (III) Enter into Agreement with BNY
Financial Corporation and (IV) Enter into Agreement
with National Resource Recovery.
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
DATED AS OF MAY , 1999
BY AND AMONG
ATLAS ENVIRONMENTAL, INC.,
SOUTH FLORIDA THERMAL SERVICES, INC.,
FLORIDA SPECIALIZED CARRIERS, INC.,
KLEENSOIL INT'L., INC.,
TRANSOIL, INC.,
WASTE MAGIC RECYCLERS, INC.,
WASTE MAGIC RECYCLERS PALM BEACH, INC.,
WASTE MAGIC RECYCLERS CENTRAL, INC.,
HOMESTEAD LANDFILL & RECYCLING MGMT. CO.,
NAPLES RECYCLING RESOURCES, INC.,
SOUTH FLORIDA RECOVERY, INC. AND
ROYAL CROWN CARTING, INC.
AND SONEET R. KAPILA, AS TRUSTEE
(COLLECTIVELY, THE "SELLER")
AND
J. R. CAPITAL CORP.,
ATLAS-HOMESTEAD, INC.,
ATLAS-NAPLES, INC.,
ATLAS-LOX ROAD, INC.,
ATLAS-RIVIERA, INC.,
ATLAS-TRANSOIL, INC. AND
ATLAS-DAVIE, INC.
ROYAL CROWN, INC.
(COLLECTIVELY, THE "PURCHASER")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
1. DEFINITIONS................................................................................... 1
1.1 Assumed Executory Contracts.......................................................... 1
1.2 Assumed Obligations.................................................................. 1
1.3 Bankruptcy Code...................................................................... 1
1.4 Bankruptcy Court..................................................................... 1
1.5 Bid Procedure Order.................................................................. 2
1.6 Closing.............................................................................. 2
1.7 Competing Bid........................................................................ 2
1.8 Deposit.............................................................................. 2
1.9 Final Order.......................................................................... 2
1.10 Gains Tax Undertaking................................................................ 2
1.11 IRC.................................................................................. 2
1.12 Motion............................................................................... 2
1.13 Permits.............................................................................. 2
1.14 Purchase Approval Order.............................................................. 2
1.15 Purchase Price....................................................................... 2
1.16 Purchased Assets..................................................................... 2
1.17 Real Property........................................................................ 2
1.18 Secured Tax Liens.................................................................... 2
2. PURCHASE AND SALE............................................................................. 3
2.1 Assets............................................................................... 3
2.2 Consideration....................................................................... 4
2.3 Purchase Price Adjustment............................................................ 4
3. ASSUMPTION OF AGREEMENTS. LIABILITIES AND OTHER
OBLIGATIONS OF SELLER.................................................................................. 4
3.1 Assumption of Specified Liabilities.................................................. 4
3.2 Assumed Executory Contracts/Permits.................................................. 5
3.3 Liens on Purchased Assets............................................................ 5
3.4 Tax Prorations....................................................................... 5
3.5 No Other Liabilities................................................................. 6
4. CLOSING....................................................................................... 6
4.1 Time and Place....................................................................... 6
4.2 Transactions at Closing.............................................................. 6
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER.................................................. 7
5.1 Authority; Non-Contravention......................................................... 7
5.2 Brokers.............................................................................. 7
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................... 7
6.1 Organization and Good Standing of Purchaser.......................................... 7
6.2 Corporate Authority; Binding Effect.................................................. 7
6.3 Brokers.............................................................................. 8
7. CONDUCT OF BUSINESS PENDING CLOSING........................................................... 8
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS............................................... 8
9. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS.............................................. 9
9.1 Representations and Warranties True at Closing....................................... 9
9.2 Purchase Approval Order.............................................................. 9
9.3 BNYFC Undertaking.................................................................... 9
10. TERMINATION................................................................................... 9
10.1 Termination.......................................................................... 9
10.2 Effect of Termination................................................................ 10
11. GENERAL....................................................................................... 11
11.1 Costs and Expenses................................................................... 11
11.2 Exclusivity.......................................................................... 11
11.3 Books and Records.................................................................... 11
11.4 Notices.............................................................................. 11
11.5 Entire Agreement..................................................................... 12
11.6 Governing Law........................................................................ 12
11.7 Headings............................................................................. 12
11.8 Assigns.............................................................................. 12
11.9 Waiver............................................................................... 13
11.10 No Implied Rights or Remedies........................................................ 13
11.11 Counterparts......................................................................... 13
11.12 Severability......................................................................... 13
11.13 No Survivability..................................................................... 13
</TABLE>
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the day of May, 1999, by and among
ATLAS ENVIRONMENTAL, INC., SOUTH FLORIDA THERMAL SERVICES, INC., FLORIDA
SPECIALIZED CARRIERS, INC., KLEENSOIL INT'L., INC., TRANSOIL, INC., WASTE MAGIC
RECYCLERS, INC., WASTE MAGIC RECYCLERS PALM BEACH, INC., WASTE MAGIC RECYCLERS
CENTRAL, INC., HOMESTEAD LANDFILL & RECYCLING MGMT. CO., NAPLES RECYCLING
RESOURCES, INC., SOUTH FLORIDA RECOVERY, INC. and ROYAL CROWN CARTING, INC.
(collectively, the "Company"), and any affiliate or related entity of the
foregoing companies holding title or any other interest of any kind, nature or
description in any of the assets to be purchased hereunder, as their interests
may appear and Soneet R. Kapila, as Trustee (the "Trustee" and together with the
Company, the "Seller"), and J.R. CAPITAL CORP. ("Capital"), ATLAS-HOMESTEAD,
INC. ("Homestead"), ATLAS-NAPLES, INC. ("Naples"), ATLAS-LOX ROAD, INC. ("Lox"),
ATLAS-RIVIERA, INC. ("Riviera"), ATLAS-TRANSOIL, INC. ("Transoil"), ATLAS-DAVIE,
INC. ("Davie") and ROYAL CROWN, INC. ("Royal"), each of which is a Florida
corporation (collectively, the "Purchaser").
WHEREAS, the Company is engaged in the waste management and soil
remediation business (the"Business");
WHEREAS, on January 14, 1997, the Company has filed a petition seeking
relief under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11
Proceeding");
WHEREAS, the Seller desires to sell and Purchaser desires to purchase
substantially all of the assets of the Company on the terms and subject to the
conditions set forth herein;
WHEREAS, the Trustee has been appointed to serve as trustee in the
Chapter 11 Proceeding with authority to manage and operate the Company and to
sell the assets thereof;
NOW THEREFORE, in consideration of the mutual promises and agreements
set forth herein, Purchaser and the Seller agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
1.1 ASSUMED EXECUTORY CONTRACTS has the meaning set forth in
Section 3.2 hereof.
1.2 ASSUMED OBLIGATIONS has the meaning set forth in Section
3.1 hereof.
1.3 BANKRUPTCY CODE means the United States Bankruptcy Code,
11 U.S.C. ss.ss.101 ET Seq. -- ----
1.4 BANKRUPTCY COURT means the United States Bankruptcy Court
for the Southern District of Florida.
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1.5 BID PROCEDURE ORDER has the meaning set forth in the
Motion.
1.6 CLOSING and "Closing Date" have the respective meanings
set forth in Section 4.1 hereof.
1.7 COMPETING BID has the meaning set forth in Section 10
hereof.
1.8 DEPOSIT means the deposit of $200,000 paid by the
Purchaser to the Trustee upon execution of this Agreement.
1.9 FINAL ORDER means any order entered by the Bankruptcy
Court that is both final and nonappealable pursuant to the Bankruptcy Code (11
U.S.C. 101 et. seq.), the Federal Rules of Bankruptcy Procedure and any
applicable local rules for the United States Bankruptcy Court for the Southern
District of Florida.
1.10 GAINS TAX UNDERTAKING has the meaning set forth in
Section 3.1 hereof.
1.11 IRC means the Internal Revenue Code of 1986, as amended.
1.12 MOTION means the motion, dated April 19, 1999 (Case No.
97-20203- BKC-RBR) submitted by the Trustee to the Bankruptcy Court seeking
entry of an order (I) scheduling hearings to approve (A) the sale of
substantially all of the Company's assets, free and clear of all liens, claims
and encumbrances other than tax liens, pursuant to 11 U.S.C sections 105 and 363
and the assumption and assignment of certain executory contracts, unexpired
leases and permits pursuant to 11 U.S.C. section 365, and approving agreement
with BNY Financial Corporation and (B) on an emergency basis, bidding procedures
and a break up fee, (II) approving bidding procedures and break up fee and (III)
approving the sale of substantially all of the Company's assets and approving
agreement with BNY Financial Corporation.
1.13 PERMITS has the meaning set forth in Section 2.1(ix)
hereof.
1.14 PURCHASE APPROVAL ORDER means the order of the Bankruptcy
Court approving this Agreement and the transactions contemplated hereby, a copy
of which is attached hereto as Exhibit 4.
1.15 PURCHASE PRICE has the meaning set forth in Section 2.2
hereof.
1.16 PURCHASED ASSETS has the meaning set forth in Section 2.1
hereof.
1.17 REAL PROPERTY has the meaning set forth in Section
2.1(vi) hereof.
1.18 SECURED TAX LIENS means any liabilities of the Company
owed to governmental units for taxes that were (a) due and owing as of the
Closing Date and (b) are secured by liens against the Purchased Assets as of the
Closing Date.
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2. PURCHASE AND SALE.
2.1 ASSETS. Subject to the terms and conditions set forth in
this Agreement, at the Closing the Seller shall sell, assign, transfer and
deliver to Purchaser on an "as is, where is" basis, with no representations or
warranties of any kind, nature or description, except as otherwise specifically
set forth herein, and Purchaser shall purchase, acquire and take assignment and
delivery of, all the right, title and interest of the Seller in and to all of
the tangible and intangible assets owned by the Company relating to the Business
or used in the conduct of the Business and which are set forth in this Agreement
(collectively, the "Purchased Assets"). The Purchased Assets shall include,
without limitation, the following:
(i) Outstanding Accounts Receivable (other than any
receivable owed by Wastemasters, Inc. or any affiliate) owned by the
Company on the Closing Date (as defined herein), including any prepaid
Accounts Receivable;
(ii) All of the Company's Automotive Vehicles, as
more particularly set forth on Schedule "A";
(iii) All Equipment owned by the Company, as more
particularly set forth in Schedule "B";
(iv) All of the Company's service parts, tools and
shop equipment and related goods used or maintained in connection with
the Purchased Assets ("Miscellaneous Items");
(v) All of the Assumed Executory Contracts (as
defined below), to the extent assignable;
(vi) The Company's real property (the "Real
Property") wherever located;
(vii) Any claims and/or causes of action the Company
may have against USA Waste, Inc. whether contingent or non-contingent;
(viii) The proceeds of any causes of action or claims
the Company, or any party acting on behalf of the bankruptcy estates of
the Company realizes from any third party by commencement of litigation
or otherwise, either pre- or post-closing equal to fifty percent (50%)
of the gross recovery, including any credits or setoffs, up to a
maximum of $500,000 in total to be paid to Purchaser exclusive of the
$2,000,000 Contribution Fund (as defined in the Motion);
(ix) All permits and licenses held by the Company and
necessary or desirable to the operation of the Business to the extent
the same are transferable ("Permits"); and
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(x) All other personal property of the Seller, of any
kind or nature, not specially identified above;
together with all deposits relating to the Assumed Executory Contracts payables
assumed by Purchaser and financial assurances provided to permitting agencies,
furniture and fixtures, supplies, leases, licenses, trademarks and tradenames,
franchises, executory contracts, goodwill, and other rights of the Company as a
going concern and other assets directly used in connection with the operation of
the business of every kind, nature and description, wheresoever located and
whether or not carried or reflected on the books and records of the Company. The
Purchased Assets shall specifically exclude only the assets of the Company as
set forth on Schedule"C" ("Excluded Assets").
2.2 CONSIDERATION. The consideration (the "Purchase Price")
for all of the Assets shall consist of Twenty-Two Million Four Hundred and Two
Thousand Dollars ($22,402,000.00) in cash, subject to adjustment pursuant to the
terms of Section 2.3 below. In addition to the Purchase Price, Purchaser will
assume the Company's obligation to pay, pursuant to the terms of this Agreement,
the items listed in Sections 3.1 (i)-(iii) and 3.2 hereof
2.3 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be (i)
increased by an amount equal to the amount by which the indebtedness due BNY
Financial Corporation ("BNYFC") increases as the result of the accrual of
interest, charges and expenses as set forth in BNYFC's pro-petition loan
documentation with the Company from and after March 31, 1999 through the Closing
Date and (ii) decreased by an amount, if any, by which the allowed BNYFC claim
is less than $22,402,000.00 through the Closing Date.
2.4 PAYMENT. Except as otherwise provided herein, the Purchase
Price shall be payable at the Closing.
3. ASSUMPTION OF AGREEMENTS. LIABILITIES AND OTHER
OBLIGATIONS OF SELLER.
3.1 ASSUMPTION OF SPECIFIED LIABILITIES. At the Closing,
subject to the terms and conditions of this Agreement, Purchaser shall assume
and agree to pay, perform, fulfill and discharge the following specified
liabilities and obligations of the Company as and when the same become due and
payable to the extent provided herein (collectively, the "Assumed Obligations"):
(i) any current outstanding non-tax payables as of the Closing Date (other than
payables due to Wastemasters, Inc. or any of its affiliates) in an amount not to
exceed $800,000 in the aggregate, (ii) Secured Tax Liens, and (iii) the amount
of all taxes attributable to the gain, including the gain attributable to the
Tax Gross Up Amounts, (as defined below) arising from the consummation of the
sale and transfer by Seller to Purchaser pursuant to this Agreement (the "Tax
Gross Up Amounts"). In no event shall the aggregate Tax Gross Up Amounts exceed
$400,000. In calculating the Tax Gross Up Amounts, the Seller shall apply any
offsets, expenses, refunds, credits and deductions which may reduce the
Company's tax liability (collectively, the "Tax Reductions"), in compliance with
the Internal Revenue Code. The
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undertaking referred to in the immediately preceding clause (iii) is referred to
herein as the "Gains Tax Undertaking". The Gains Tax Undertaking shall be
guaranteed by BNYFC consistent with Section 9.3 hereof. Seller shall apply any
and all Tax Reductions in compliance with the Internal Revenue Code.
3.2 ASSUMED EXECUTORY CONTRACTS/PERMITS. As of the date
hereof, the Company is a party to certain executory leases, contracts and
licenses which are necessary to the conduct of the Business relating to the
Purchased Assets (the "Executory Contracts"). A list of the Executory Contracts
to be assumed by Purchaser is annexed hereto as Schedule "D." Seller shall take
all action reasonably necessary in order to assume and assign such specified
Executory Contracts to Purchaser, or its designees, in accordance with the
Bankruptcy Code. Upon entry by the Bankruptcy Court of the Purchase Approval
Order, (i) such Executory Contracts shall be assumed by the Seller and assigned
to Purchaser, and such assumption and assignment shall be effective as of the
closing of the transactions contemplated hereby ("Assumed Executory Contracts")
and (ii) Purchaser shall assume the Assumed Executory Contracts and agree to
perform, comply with and be bound by all terms, conditions and covenants of the
Assumed Executory Contracts to be performed after the Closing, including without
limitation paying and discharging, as and when due, all amounts due under the
Assumed Executory Contracts after the Closing. The Seller shall pay all "cure"
amounts required to assume the Assumed Executory Contracts. Additionally, the
Company shall assign all Permits, to the extent permitted by law, which are
necessary to the conduct of the Business, to the Purchaser.
3.3 LIENS ON PURCHASED ASSETS. All of the Purchased Assets
shall be conveyed and/or assigned to Purchaser free and clear of all liens,
claims, encumbrances or interests in or upon the Purchased Assets, including but
not limited to those liens, claims and encumbrances previously granted by the
Company to BNYFC, except (i) liens held by BNYFC to secure indebtedness owed to
BNYFC if and only if BNYFC shall agree, in its sole and absolute discretion, to
allow Purchaser to assume some or all of the indebtedness due it from the
Company and BNYFC and Purchaser agree that the Purchased Assets shall be subject
to such liens, claims and encumbrances of BNYFC to secure such indebtedness (the
amount of which shall be deemed cash equivalent for purposes hereof), and (ii)
the Secured Tax Liens and the Gains Tax Undertaking, all in accordance with
Sections 363(f) and 365 of the Bankruptcy Code, respectively. Notwithstanding
the foregoing, (i) the Purchased Assets comprised of Equipment (as such term is
defined in the New York Uniform Commercial Code) shall be conveyed to Purchaser
or its designees subject to any validly perfected purchase money security
interests; and (ii) Real Property shall be conveyed to Purchaser subject to the
consent decrees issued by state and local environmental agencies. Purchaser
shall pay any documentary stamp taxes due on the transfer of the real estate at
closing.
3.4 TAX PRORATIONS. Notwithstanding the foregoing, Purchaser
does not assume any liability for any debt owed to a governmental unit for taxes
or other debts that became due and payable after December 31, 1998 except for
the Gains Tax Undertaking and as hereinafter set forth in this Section 3.4. All
personal property taxes, ad valorem taxes, real property taxes
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and intangible taxes for calendar year 1999 shall be prorated on the Closing
Date based on the taxes paid for calendar year 1998. On the Closing Date Seller
shall deposit in a segregated account within the Company's bankruptcy estate an
amount equal to the Company's pro rata share of such 1999 taxes calculated in
accordance with the provisions of the preceding sentence (the "Estimated Tax
Amount"). Subject to any adjustment required pursuant to this section 3.4, the
entire Estimated Tax Amount shall be released to Purchaser, without further
order of the Bankruptcy Court, within 10 days after Purchaser presents to
Trustee a 1999 tax bill. In the event the actual taxes due are more or less than
the estimated taxes escrowed, Purchaser and Seller shall adjust the amount due
to reflect actual taxes owed. In the event Purchaser appeals the 1999 real and
personal property tax assessments, Seller shall receive its pro rata portion of
any net reduction (after Purchaser's costs and expenses incurred in connection
with such appeal, including attorney's fees.)
3.5 NO OTHER LIABILITIES. Except as otherwise required in
connection with the assumption of the Assumed Executory Contracts, the Assumed
Obligations, the Gains Tax Undertaking and any other obligations agreed to in
this Agreement the Seller acknowledges that the Purchaser is not offering to
assume, and agrees that Purchaser shall not assume, any contracts, obligations
or liabilities of Seller, including, without limitation, obligations with
respect to taxes that do not constitute Secured Tax Liens, other than those
contracts, obligations, or liabilities that may be designated in writing to
Seller by Purchaser prior to the Closing.
4. CLOSING.
4.1 TIME AND PLACE. The closing of the sale of the Purchased
Assets (the "Closing") shall occur on the first business day after the
satisfaction of all conditions precedent set forth in Section 8 or 9 hereof, as
the case may be, and the Purchase Approval Order becomes a Final Order, and in
no event later than May 28, 1999, unless Purchaser or Seller, as applicable, in
its sole discretion, elects to close either prior to the Purchase Approval Order
becoming a Final Order, without the satisfaction of one or more of the
conditions precedent set forth in Section 8 or 9 hereof, as applicable, or
subsequent to May 28, 1999 (the "Closing Date"). If a qualified overbid for the
Purchased Assets is accepted from a party other than the Purchaser, the closing
of such sale shall occur on or prior to May 28, 1999 unless otherwise agreed in
writing by the successful bidder and the Seller.
4.2 TRANSACTIONS AT CLOSING. At the Closing:
(a) Purchaser shall pay the Purchase Price, as
adjusted, to the Trustee.
(b) The Seller shall duly execute and deliver to
Purchaser a bill of sale or bills of sale (the "Bill of Sale"), bargain and sale
deed (without covenants) with respect to the owned Real Property (the "Deeds")
each of which shall be in substantially the forms attached hereto as Exhibits 1
and 2, respectively, and such certificates of title and other instruments of
assignment or transfer or related agreements or documents with respect to the
Purchased Assets as the Purchaser may reasonably request and as may be necessary
to vest in Purchaser all of the
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Seller's right, title and interest in and to the Purchased Assets free and clear
of any and all liens, security interests, encumbrances, pledges, claims,
charges, mortgages, other restrictions, and other interests whether contingent,
perfected or unperfected other than any liens specifically contemplated hereby.
(c) Purchaser and Seller shall duly execute and
deliver one or more instruments of assignment and assumption (collectively, the
"Instrument of Assignment and Assumption"), substantially in the form attached
hereto as Exhibit 3 with respect to the Assumed Executory Contracts.
(d) Purchaser and Seller shall duly execute and/or
deliver such other certificates, documents, agreements and third party consents
as are required or contemplated to be executed and/or delivered at the Closing
pursuant to the terms of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. Seller represents and
warrants to Purchaser as of the date hereof, and as of the Closing Date, as
follows:
5.1 AUTHORITY; NON-CONTRAVENTION. Subject to and after giving
effect to the approval and authority of each of the Bid Procedure Order and the
Purchase Approval Order, and compliance with applicable requirements of the
Bankruptcy Code, (a) Seller has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
and (b) this Agreement has been duly executed and delivered by Seller and
(assuming due execution and delivery by Purchaser) constitutes Seller's legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
5.2 BROKERS. Seller has not retained, utilized or been
represented by any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller as of the date hereof and as of the Closing as follows:
6.1 ORGANIZATION AND GOOD STANDING OF PURCHASER. Each
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the state of Florida. Each Purchaser has all requisite power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
6.2 CORPORATE AUTHORITY; BINDING EFFECT. Subject to and after
giving effect to the approval and authority of each of the Bid Procedure Order
and the Approval Order, and compliance with applicable provisions of the
Bankruptcy Code, Purchaser has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and (b) this Agreement has been duly executed and delivered by Purchaser
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and (assuming due execution and delivery by the Seller) constitutes Purchaser's
legal, valid and binding obligation, enforceable against Purchaser in accordance
with its terms.
6.3 BROKERS. Purchaser has not retained, utilized or been
represented by any investment banker, broker or finder in connection with the
transactions contemplated hereby.
7. CONDUCT OF BUSINESS PENDING CLOSING. Prior to the Closing, Seller
shall continue to operate its business in the ordinary course and consistent
with past practices and shall use commercially reasonable efforts and diligence
to preserve the business operations of Seller intact, to keep available the
services of its present personnel, to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements and
understandings of Seller and to preserve the goodwill of its suppliers,
customers, community and others having relations with Seller.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The
obligation of Purchaser to consummate the Closing shall be subject to the
satisfaction at or prior to the Closing within the time periods pursuant to
which each of the following conditions is required to be met pursuant to this
Agreement and recognizing that time is of the essence (to the extent
noncompliance is not waived in writing by Purchaser in Purchaser's sole and
absolute discretion):
(a) The representations and warranties made by the
Seller in or pursuant to this Agreement shall be true and correct in all
material respects when made and at and as of the Closing Date with the same
effect as though such representations and warranties had been made or given at
and as of the Closing Date.
(b) The form of the Purchase Approval Order shall (x)
be acceptable to Purchaser and to BNYFC, (y) provide for the proceeds to be paid
at Closing to BNYFC, minus such amounts, if any, as BNYFC may agree in its sole
and absolute discretion to contribute to Seller's estate.
(c) The Seller shall have assumed and assigned to
Purchaser in accordance with the applicable provisions of the Bankruptcy Code,
the Assumed Executory Contracts and, to the extent permitted by applicable law,
any permits and licenses which are listed on Schedule D hereto;
(d) The Purchaser shall be satisfied, in its
reasonable discretion, that there shall have been no material adverse change in
the Purchased Assets or in the Company's business or business prospects (and no
adverse ruling of the Bankruptcy Court regarding the Contractor Agreement and
Lease Agreements between Seller and National Resource Recovery Ltd. referred to
on Schedule D attached hereto that would affect the assignment thereof) since
the date hereof;
8
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(e) A closing no later than May 28, 1999, unless such
date is extended by Purchaser, in its sole discretion;
(f) The bankruptcy estates of the Company provide
releases of any and all claims that they may have of any kind or nature against
BNYFC;
(g) The letter agreement between Seller and BNYFC
dated April 15, 1999 has been approved as part of the Purchase Approval Order by
the Bankruptcy Court;
(h) Seller shall have continued to pay all of the
accounts payable and taxes of the Company as they become due up to the Closing
Date; and
(i) BNYFC shall have agreed to provide Purchaser with
a loan sufficient to pay the Purchase Price, including all adjustments and
assumed liabilities, and provide working capital for the continued operations,
all under terms and conditions satisfactory to Purchaser and to be advanced on
or before the Closing Date.
(j) A competitive bid procedure whereby competing
bidders may submit competing bids (each, a "Competing Bid") shall have been held
in compliance with the Bid Procedure Order entered by the Bankruptcy Court on
April 29, 1999.
9. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS. The
obligation of the Seller to consummate the Closing shall be subject to
satisfaction at or prior to the Closing of the following conditions (to the
extent noncompliance is not waived in writing by Seller in Seller's sole and
absolute discretion):
9.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by Purchaser in or pursuant to this
Agreement shall be true and correct in all material respects when made and at
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given at and as of the Closing Date.
9.2 PURCHASE APPROVAL ORDER. The form of the Purchase Approval
Order shall (x) be acceptable to Seller, (y) provide for the proceeds to be paid
at closing to BNYFC, minus such amounts, if any, as BNYFC may agree in its sole
and absolute discretion to contribute to the Seller's estate.
9.3 BNYFC UNDERTAKING. Seller shall have received an
undertaking from BNYFC to guarantee Purchaser's obligations to Seller pursuant
to Section 3.1(iii) above, in form and substance reasonably satisfactory to
Seller on or before the Closing Date.
10. TERMINATION.
10.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
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(a) by mutual written consent of Purchaser and
Seller;
(b) by Purchaser:
(i) if Seller is in material breach or default
under any of its representations, warranties, covenants or agreements set forth
in this Agreement;
(ii) if the Closing does not occur by May 28,
1999, except if the failure to close is due to Purchaser's refusal to close by
such date notwithstanding Seller's satisfaction of all of its obligations under
this Agreement and compliance with Section 8 above in all respects;
(iii) if a Competing Bid is accepted by Seller or
approved by the Bankruptcy Court pursuant to the Bid Procedure Order; or
(iv) if any of the conditions set forth in
Section 8 hereof have not been satisfied within the required time periods set
forth herein.
(c) by Seller:
(i) if Purchaser is in material breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement;
(ii) if the Closing does not occur on or before
May 28, 1999, except if the failure to close is due to Seller's refusal to close
by such date notwithstanding Purchaser's satisfaction of all of its obligations
under this Agreement and compliance with Section 9 above in all respects;
(iii) if any of the conditions set forth in
Section 9 hereof have not been satisfied within the time periods set forth
herein; or
(iv) if a Competing Bid is accepted by Seller or
approved by the Bankruptcy Court pursuant to the Bid Procedure Order.
10.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement
pursuant to paragraphs (a), (b)(ii), (iii) or (iv), or (c)(ii), (iii) or (iv) of
Section 10.1, this Agreement shall forthwith become null and void and have no
further force or effect, and none of the parties hereto nor any of their
respective directors, officers, shareholders, affiliates, representatives or
advisors shall have any further obligation or liability under the provisions of
this Agreement.
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(b) Upon the closing of a sale of the Purchased
Assets pursuant to a Competing Bid, Seller shall, on the date of such closing,
pay to Purchaser a break-up fee in immediately available funds in the amount of
$200,000.
(c) The Deposit, with interest accrued thereon, if
any, shall be returned to Purchaser or its designees upon the earliest to occur
of (i) the date on which the Bankruptcy Court enters a Purchase Approval Order
designating a Competing Bidder as the successful purchaser of the Purchased
Assets, or (ii) the date of the Closing if the Purchaser is the successful
purchaser of the Purchased Assets pursuant to a Purchase Approval Order or (iii)
May 28, 1999.
11. GENERAL.
11.1 COSTS AND EXPENSES. All costs and expenses of the
preparation, execution and consummation of this Agreement and the agreements and
transactions contemplated hereby, including without limitation legal,
accounting, administrative costs and expenses and other costs, fees and expenses
shall be the sole responsibility and obligation of the party incurring the same.
11.2 EXCLUSIVITY. Except as may be required by the Bankruptcy
Court or the Bankruptcy Code, at all times during the period commencing on the
date hereof and ending on the earlier of the Closing or the termination of this
Agreement pursuant to Section 10 hereof, neither the Seller nor its respective
agents, affiliates, directors, officers, employees and principals shall solicit
any other offer or proposal for the sale of all or any part of the assets of the
Company (including any higher or better offer), except in accordance with the
Bid Procedure Order. Seller shall promptly advise Purchaser of any inquiries or
other communications, other than pursuant to the Bid Procedures Order concerning
the purchase of all or any of its assets received from any third party after the
date hereof.
11.3 BOOKS AND RECORDS. Purchaser shall maintain all books and
records of the Company after the Closing Date. Purchaser shall, however, upon
reasonable written notice provide the Trustee with full access to the Company's
books and records during normal business hours for any reason, including,
without limitation, for review, analysis or photocopying. Notwithstanding
anything to the contrary herein, Purchaser's obligations under this Section 11.3
shall continue until the Chapter 11 Proceeding is finally closed or, if the
Chapter 11 Proceeding is converted to a case under Chapter 7 of the Bankruptcy
Code, until such case under Chapter 7 of the Bankruptcy Code is finally closed.
11.4 NOTICES. All notices, demands or other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if mailed by certified mail, return receipt
requested, postage prepaid, or sent by written facsimile transmission, as
follows:
If to Seller, to:
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Soneet R. Kapila, Trustee
1000 South Federal Highway
Suite 200
Fort Lauderdale, Florida 33316
with a copy sent concurrently to:
Holland & Knight, LLP
701 Brickell Avenue
Suite 3000
Miami, Florida 33131
Attn: Craig Rasile, Esq.
If to Purchaser, to:
J.R. Capital Corp.
16224 N.W. 82nd Place
Miami Lakes, Florida 33016
Attention: Mr. Jack A. Casagrande
with a copy sent concurrently to:
Linda G. Worton, Esq.
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
11.5 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and shall not be amended
except by a written instrument hereafter signed by all of the parties hereto.
The Exhibits and Schedules referred to in this Agreement are incorporated into
this Agreement for all purposes.
11.6 GOVERNING LAW. The validity and construction of this
Agreement shall be governed by and construed in accordance with (i) the laws of
the State of Florida, without regard to principles of conflicts of law or choice
of law, applicable to agreements made and to be performed entirely within such
State and (ii) Title 11 of the Bankruptcy Code, where applicable.
11.7 HEADINGS. The headings of Sections and Subsections are
for reference only and shall not limit or control the meaning thereof.
11.8 ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this
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Agreement, nor the obligations of any party hereunder, shall be assignable or
transferable by any such party without the prior written consent of each of the
parties hereto.
11.9 WAIVER. Either party hereto at its sole and exclusive
option may from time to time waive any condition precedent, covenant,
representation, warranty or other provision of this Agreement provided that such
waiver is in writing and duly signed by such party.
11.10 NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm or corporation,
other than Seller and Purchaser and their respective affiliates, any rights or
remedies under or by reason of this Agreement.
11.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.12 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
11.13 NO SURVIVABILITY. The representations and warranties set
forth herein shall not survive the Closing of the transactions contemplated
hereby.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the date and year first above
written.
J.R. CAPITAL CORP.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ATLAS-HOMESTEAD, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
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ATLAS-NAPLES, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ATLAS-LOX ROAD, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ATLAS-RIVIERA, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ATLAS-TRANSOIL, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ATLAS-DAVIE, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
ROYAL CROWN, INC.
By: /s/ JACK R. CASAGRANDE
------------------------------------
Name: Jack R. Casagrande
Title: President
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ATLAS ENVIRONMENTAL, INC.,
SOUTH FLORIDA THERMAL
SERVICES, INC., FLORIDA
SPECIALIZED CARRIERS, INC.,
KLEENSOIL INT'L., INC.,
TRANSOIL, INC., WASTE MAGIC
RECYCLERS, INC., WASTE MAGIC
RECYCLERS PALM BEACH, INC.,
WASTE MAGIC RECYCLERS CENTRAL,
INC., HOMESTEAD LANDFILL &
RECYCLING MGMT.CO., NAPLES
RECYCLING RESOURCES, INC.,
SOUTH FLORIDA RECOVERY, INC.
and ROYAL CROWN CARTING, INC.
By: /s/ SONEET R. KAPILA
-------------------------------------
Soneet R. Kapila, as Chapter 11 Trustee
15
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
In re CASE NO. 97-20203-BKC-RBR
CHAPTER 11
ATLAS ENVIRONMENTAL, INC. (Jointly Administered)
SOUTH FLORIDA THERMAL SERVICES, INC. CASE NO. 97-20204-BKC-RBR
FLORIDA SPECIALIZED CARRIERS, INC. CASE NO. 97-20205-BKC-RBR
KLEENSOIL INT'L., INC. CASE NO. 97-20206-BKC-RBR
TRANSOIL, INC. CASE NO. 97-20207-BKC-RBR
WASTE MAGIC RECYCLERS, INC. CASE NO. 97-20208-BKC-RBR
WASTE MAGIC RECYCLERS PALM BEACH, INC. CASE NO. 97-20209-BKC-RBR
WASTE MAGIC RECYCLERS CENTRAL, INC. CASE NO. 97-20210-BKC-RBR
HOMESTEAD LANDFILL & RECYCLING
MGMT. CO. CASE NO. 97-20211-BKC-RBR
NAPLES RECYCLING RESOURCES, INC. CASE NO. 97-20212-BKC-RBR
SOUTH FLORIDA RECOVERY, INC. CASE NO. 97-20213-BKC-RBR
and ROYAL CROWN CARTING, INC. CASE NO. 97-20214-BKC-RBR
Debtors.
- ------------------------------------/
ORDER AUTHORIZING THE CHAPTER 11 TRUSTEE TO (I) SELL
ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES
OTHER THAN TAX LIENS; (II) ASSUME AND ASSIGN
EXECUTORY CONTRACTS, UNEXPIRED LEASES AND PERMITS;
(III) ENTER INTO AGREEMENT WITH BNY FINANCIAL CORPORATION
AND (IV) ENTER INTO AGREEMENT WITH NATIONAL RESOURCE RECOVERY
Upon the Trustee's Motion Seeking Entry of an Order: (I) Scheduling
Hearings to Approve (A) the Sale of Substantially All of the Debtors' Assets,
Free and Clear of All Liens, Claims and Encumbrances Other than Tax Liens,
Pursuant to 11 U.S.C. ss.ss. 105 and 363 and the Assumption and Assignment of
Certain Executory Contracts, Unexpired Leases and Permits Pursuant to 11 U.S.C.
ss. 365, and Approving Agreement With BNY Financial Corporation and (B) On an
Emergency Basis, Bidding Procedures and Break Up Fee, (II) Approving Bidding
Procedure and Break Up Fee and (III) Approving the Sale of Substantially All of
the Debtors' Assets and Approving Agreement With BNY Financial Corporation (the
"Motion"), Soneet R.
<PAGE>
Kapila, Chapter 11 Trustee ("Trustee") of the above-captioned
Debtors-in-possession (hereinafter referred to collectively as the "Debtors"),
dated April 15, 1999, this Court entered an Order (the "Scheduling Order") (i)
scheduling a hearing to be held on May 21, 1999 at 9:30 a.m. (the "Sale
Hearing") to consider approval of the sale of substantially all of the assets of
the Debtor to J.R. Capital, Inc., or its designee(s) (the "Purchaser"),
authorizing the assumption and assignment of certain specified executory
unexpired contracts, unexpired leases and permits, and approving an agreement
between the Trustee and BNY Financial Corporation ("BNYFC") relating to the
consummation of the sale transactions set forth in the Motion; and (ii)
scheduling a hearing to be held on April 29, 1999 at 1:30 P.M. to approve
bidding procedures and break up fees in connection with such sale (the "Bid
Procedure Hearing"). At the conclusion of the Bid Procedure Hearing, an Order
was entered approving the bidding procedures and break up fees (the "Bid
Procedure Order"). The Motion operates as a motion for authority to sell assets
pursuant to, INTER ALIA, Sections 105, 363(b), 363(f), 363(m), 365(b) and 365(f)
of Title 11 of the United States Code, Bankruptcy Rules 2002, 4001, 6004, 6006
and 9019 and Local Rules 2002-1, 4001-1, 6004-1, 6006-1, 9013-1 and 9019-1 for
related relief necessary to consummate the transactions. The assets for which
this authority was sought include substantially all of the real and personal
property of the Debtor, including all general intangibles, as more specifically
set forth in the Asset Purchase Agreement between the Trustee and the Purchaser
dated May 14, 1999, heretofore filed with the Court (the "Purchase Agreement")
in connection with the Motion. The Motion seeks approval of the Purchase
Agreement to the Purchaser, or any party making the highest and best offer at
the Sale Hearing in accordance with the Bid Procedure Order. Notice of the Bid
Procedure Hearing and Sale Hearing was provided to all parties reflected in
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the Motion and required in the Scheduling Order, as well as to prospective
purchasers. The Court, having reviewed the Motion and any written and oral
objections thereto, having considered the record herein and the evidence
presented, after hearing Holland & Knight, counsel to the Trustee, in support of
the Motion at the Sale Hearing, and after hearing all other parties interested
in being heard and providing an opportunity for all interested parties to bid on
the Purchased Assets, it was adjudged that the offer of the Purchaser set forth
in the Purchase Agreement was the highest and best offer and that the Purchased
Assets should be sold to the Purchaser pursuant to the Purchase Agreement and
that the related relief set forth in the Motion should be granted. In connection
with the adjudication, the Court makes the following findings of fact and
conclusions of law.
FINDINGS OF FACT
A. The Debtors are in the waste management business. They own, manage
and operate recycling, remediation, landfill and related operations. The
Debtors' cases have been pending since January 14, 1997 (the "Petition Date").
The Trustee was appointed on October 19, 1998. An immediate sale of the
Purchased Assets is necessary to preserve the remaining going-concern value of
the businesses and is in the best interest of the estates.
B. Pursuant to Order of this Court dated November 18, 1998, this Court
established a deadline of January 11, 1999 for the filing of plans of
reorganization by parties in interest other than the Trustee. No plan of
reorganization was filed by any such party on or before January 11, 1999.
Because of, among other factors, the substantial administrative claims which
have accrued subsequent to the Petition Date coupled with the amount of
indebtedness secured
3
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by the Purchased Assets, confirmation of a feasible plan of reorganization
within a reasonable period of time would be costly and speculative at best,
particularly if the plan was not consensual. Therefore, a sale of substantially
all of the Debtor's assets pursuant to 11 U.S.C. ss.ss. 105 and 363, in the
absence of a confirmed plan of reorganization, is appropriate under the
circumstances. To delay the sale of the Purchased Assets pending confirmation of
a plan of reorganization would result in further diminution of the value of the
asset base and would continue the accrual of administrative claims with no
resulting definable benefit to creditors. Moreover, in the event these cases
were converted to Chapter 7 prior to a sale, this would simply result in an
additional layer of administrative expense which would further erode any
potential equity in the assets that might be available for distribution to
administrative, secured, priority unsecured and/or general unsecured creditors.
Yet another risk of conversion is the ultimate disposition of the assets,
several of which may have attendant environmental concerns. Indeed, in the event
of conversion, a Chapter 7 trustee may be precluded from abandoning these assets
due to public welfare concerns. MIDLANTIC NATIONAL BANK V. NEW JERSEY DEPARTMENT
OF ENVIRONMENTAL PROTECTION, 474 U.S. 494 (1986). Consequently, an immediate
need exists for the parties to expeditiously close on the sale of the Purchased
Assets in order to maintain the ongoing business operations of the Debtors and
to avoid incurring additional administrative expenses.
C. Purchaser's Offer to Purchase (the "Offer") and the Purchase
Agreement represent the highest and best proposal for the sale of the Purchased
Assets. No other bidders have made offers which, under the terms of the Bid
Procedure Order, exceed or otherwise improve upon the Offer and Purchase
Agreement.
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D. The Court finds further that the Trustee thoroughly exhausted all
efforts to confirm a plan of reorganization and, thereafter, to locate higher
and better offers for the Debtors' assets than that of the Purchaser.
E. The assumption and assignment to the Purchaser of the executory
contracts, unexpired leases and permits identified in Exhibit "A" to this Order
(collectively, the "Contracts") is an exercise of sound business judgment and is
in the best interests of the estates and their respective creditors.
F. All parties to the Contracts have received proper notice and an
opportunity to be heard on the assumption and assignment of their respective
Contracts. With the sole exception of National Resource Recovery, Ltd. ("NRR")
whose objection was resolved, no party to any Contract timely filed or otherwise
raised an objection to the Trustee's assumption and assignment. Since the May
21, 1999 hearing on the Motion, however, Purchaser and the Trustee have elected
not to proceed with the assumption and assignment of that certain unexpired real
property lease (the "Transoil Lease") between T/A Development, Inc., and
Transoil, Inc. Accordingly, the Trustee will seek to reject that lease, which
was listed on Schedule D to the Motion as a contract that would be assumed and
assigned. This rejection shall not affect the Purchase Price.
G. The cure amounts identified in Exhibit "A" hereto (collectively, the
"Cure Amounts") are the amounts necessary to cure any and all defaults under the
Contracts as of the Closing Date. The requirements set forth in 11 U.S.C.
ss.365, including the provision of adequate assurance of future performance, are
all satisfied.
5
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H. The Lease between NRR and Waste Magic Recyclers Central, Inc. dated
July 1992 as modified and extended (the "Lease") shall be assumed and assigned
to Purchaser pursuant to the terms of a certain Stipulation dated June 21, 1999
(the "NRR Stipulation"). The provisions of the Stipulation provide a cure of
existing defaults under the NRR Lease and adequate assurance of future
performance, as required by 11 U.S.C. ss. 365. A copy of the NRR Stipulation is
attached hereto as Exhibit "B."
I. BNYFC holds a blanket security interest in and first priority lien
on, among other things, all of the Debtor's present and future acquired
accounts, instruments, contract rights, chattel paper, general intangibles,
inventory, equipment, vehicles, real estate, including all rents, profits,
issues and revenues therefrom, with the exception of senior liens, if any,
arising in connection with unpaid real and personal property taxes (the "Tax
Liens"), and all proceeds therefrom in accordance with the pre-petition
financing agreements and the post-petition cash collateral orders heretofore
entered in the proceeding.
J. BNYFC has heretofore consented to the use of substantial amounts of
cash collateral to help sustain the Debtors' operations until the closing of the
Purchase Agreement. BNYFC has agreed with the Purchaser to provide funding to
allow the Purchaser to consummate the Purchase Agreement and has consented to
the sale transactions conditioned upon the terms and provisions of the letter
agreement dated April 15, 1999 between BNYFC and the Trustee (the "BNYFC
Agreement").
K. The BNYFC Agreement is an integral part of the sale transaction,
therefore approval of same is in the best interest of the estates. In connection
with the approval of the Purchase Agreement and the BNYFC Agreement, the Trustee
has agreed to waive, release and
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<PAGE>
discharge any and all claims which the estates have, may have, or may later
acquire against BNYFC which waiver, release or discharge is to be binding upon
any successor to the Trustee or the Debtors, including without limitation, any
Trustee appointed under Chapter 7 or any party claiming through the Trustee or
the Debtors. In addition, in consideration of BNYFC providing the financing for
the Purchase Agreement, as well as the consideration provided in the BNYFC
Agreement, the professionals retained during the Chapter 11 proceedings, with
the exception of the law firm of Ruden, McClosky, Smith, Schuster and Russell
("Ruden"), have also agreed to waive, release and discharge their right, if any,
to assert a claim against BNYFC arising under Section 506(c) of Title 11 of the
United States Code or otherwise, including theories of QUANTUM MERUIT, unjust
enrichment or similar theories which relate to expenses or actions which they
may otherwise claim was for the protection, preservation, insurance,
maintenance, location or surrender of BNYFC's collateral.
L. The Trustee, Purchaser and BNYFC have each acted in good faith.
Purchaser is therefore entitled to the protections of a good faith purchaser
under Section 363(m) of the Bankruptcy Code. In the absence of a stay pending
appeal, the Trustee, Purchaser and BNYFC will act in good faith pursuant to
Section 363(m) of the Bankruptcy Code and applicable law in closing the
transactions contemplated by the Purchase Agreement and the BNYFC Agreement and
any other documents and instruments contemplated thereby at any time after entry
of this Order.
M. The Trustee and Purchaser have negotiated the terms of the Purchase
Agreement at arms-length.
7
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CONCLUSIONS OF LAW
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The findings of fact set forth above and conclusions of law stated
herein shall constitute the Court's findings of fact and conclusions of law
pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to
Bankruptcy Rule 9014. To the extent any finding of fact later shall be
determined to be a conclusion of law, it shall be so deemed, and to the extent
any conclusion of law shall later be determined to be a finding of fact, it
shall be so deemed.
2. Based upon the Court's review of the circumstances attendant to the
Motion and the sale and other transactions proposed therein, the shortening of
the Notice of the Bid Procedure Hearing is appropriate and proper in all
respects under 11 U.S.C. ss. 102.
3. Due Notice of the Motion has been given to the Debtors, the Debtors'
secured creditors, the Creditors' Committees, the Purchaser, parties to the
Contracts, applicable governmental and regulatory agencies issuing permits to
the Debtors, all pertinent taxing authorities, the Office of the United States
Trustee, and all other parties in interest in accordance with the Motion, the
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), the Local Rules
and the Scheduling Order of this Court, and no other or further notice is
therefore necessary.
4. The Sale Hearing was properly conducted before the Court pursuant to
the terms of the Motion and the Bid Procedure Order.
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5. The Court has jurisdiction to hear and determine the propriety of
entering the Sale Order pursuant to 28 U.S.C. ss.ss. 157 and 1334. Adjudication
of the Motion is a core proceeding pursuant to 28 U.S.C. ss.ss. 157(b)(2)(A),
(M), and (O). The statutory predicates for the relief requested herein include
ss.ss. 105, 363(b), 363(f), 363(m), 365(b) and 365(f) of the Bankruptcy Code,
Rules 2002, 4004, 6004 and 9019 of the Bankruptcy Rules and Rules 2002-1,
4001-1, 6004-1, 9013-1 and 9019-1 of the Local Rules.
6. The Purchase Agreement shall be and is hereby approved in all
respects.
7. The terms and conditions of the Purchase Agreement and other
documents and instruments executed in connection therewith are hereby approved
in all respects, and the sale of the Purchased Assets and other transactions
contemplated under the Purchase Agreement are hereby authorized and approved in
all respects under Sections 105, 363(b), 363(f), 363(m), 365(a), 365(b) and
365(f) of the Bankruptcy Code;
8. The Trustee is authorized and empowered to: (i) execute the Purchase
Agreement and other instruments and documents necessary to consummate the
transactions contemplated thereby; (ii) fully perform under and implement the
Purchase Agreement, together with any and all additional instruments and
documents that may be reasonably necessary or desirable to consummate the
transactions contemplated therein, including, but not limited to, the
continuation of the Debtors' businesses consistent with and as contemplated by
the Purchase Agreement through the closing date.
9. Pursuant to Section 363(f) of the Bankruptcy Code, the Purchased
Assets acquired under the Purchase Agreement shall be transferred to the
Purchaser free and clear of all mortgages, security interests, conditional sale
or other title retention agreements, pledges,
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hypothecation, liens, judgments, encumbrances, or claim of any kind or nature
(including, without limitation) any and all "claims" as defined in Section
101(5) of the Bankruptcy Code), whether arising by agreement, statute or
otherwise and whether arising before, on or after the Petition Date
(collectively, the "Liens") other than the Tax Liens, with such Liens to attach
to the proceeds of sale with the same validity, force and effect as they now
have with respect to the Purchased Assets.
10. The Tax Liens which secure the indebtedness due from the respective
Debtors to the county tax collectors for Manatee, Collier, Palm Beach, Pasco,
Broward, Glade and Miami-Dade counties shall remain as senior liens on the
property which currently secures the existing tax indebtedness due each
respective county which indebtedness has been assumed by the Purchaser and each
county's allowed secured tax claim shall be restructured and paid by the
Purchaser over a six year period from the date of the closing of the sale (the
"Closing Date"). With the exception of Miami-Dade County, commencing on and
after the Closing Date, the restructured tax indebtedness will accrue interest
at a rate of 8% per annum, payable on a quarterly basis with the first payment
being made three months after the consummation of the sale. Absent default by
the Purchaser on its payment of the restructured tax debt, the respective tax
collectors for Manatee, Collier, Palm Beach, Pasco, Broward, and Glade counties
are prohibited from taking any administrative or legal action to issue tax
certificates or tax deeds with respect to the Purchased Assets, or conduct a
public sale of any Purchased Assets that are subject to any tax certificate.
11. The requirements set forth in 11 U.S.C. ss.365 for the assumption
and assignment of the Contracts delineated in Exhibit "A" to this Order,
including the provision of
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adequate assurance of future performance, are all satisfied. The Cure Amounts
set forth on Exhibit "A" to this Order are the amounts necessary to cure any and
all defaults under the Contracts which are to be assumed and assigned to the
Purchaser. Payment of such amounts by, or on behalf of, the Trustee shall
constitute a cure of such defaults through the Closing Date. The Trustee is
authorized and directed to assume and assign to the Purchaser those Contracts
delineated on Exhibit "A" to this Order effective on the Closing Date.
12. Except as provided in the NRR Stipulation, the Trustee shall pay
all Cure Amounts to the parties to the Contracts on or before the Closing Date.
Purchaser shall not be liable for any Cure Amounts, except as provided in the
NRR Stipulation.
13. The Trustee and Purchaser have modified the Exhibit "B" to the
Motion to delete the Landfill Disposal Agreement dated October 31, 1997 (the
"SLI Agreement") with Sebring Landfill, Inc. ("SLI") from the list of Contracts
to be assumed and assigned to Purchaser. This modification was reflected in
Exhibit "D" to the Purchase Agreement.
14. The Trustee and Purchaser have also modified Exhibit "D" to the
Purchase Agreement to delete (i) the Contractor Agreement between NRR and Waste
Magic Recyclers Central, Inc. and (ii) the Transoil Lease with T/A Development,
Inc. ("T/A") from the list of Contracts to be assumed and assigned to Purchaser.
15. The foregoing modifications are hereby approved.
16. The Trustee intends to Procure a separate Order(s) authorizing the
rejection of the SLI Agreement, the Transoil Lease and the Contractor Agreement.
17. The Trustee may permit Purchaser to use and occupy certain property
of the estate on such terms as are acceptable to Purchaser and the Trustee after
the Closing Date.
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18. Purchaser shall have no liability to T/A, NRR, SLI or any other
party for any damages resulting from their respective leases, contracts, or the
rejection thereof.
19. The NRR Stipulation is in the best interest of the estates and is
hereby approved in all respects. NRR, the Trustee, BNYFC and Purchaser are
hereby authorized to consummate the terms of the NRR Stipulation.
20. The BNYFC Agreement shall be, and hereby is, approved in all
respects.
21. The Trustee is authorized and empowered to execute the BNYFC
Agreement and other instruments and documents necessary to consummate the
transactions contemplated thereby. The Purchaser shall pay the purchase price to
the Trustee who shall remit same to BNYFC to be credited against the
indebtedness due BNYFC with the exception of that portion of the sale proceeds
which are to be contributed by BNYFC to the estates pursuant to the BNYFC
Agreement, unless the Purchaser assumes BNYFC's lien.
22. To the extent deemed necessary to obtain title insurance with
respect to acquired real property or, to perfect title with respect to acquired
personal property, Purchaser shall be entitled to a further Order from this
Court, if necessary, incorporating the legal descriptions with respect to the
real property and detailed itemizations as to all or a portion of the personal
property which are included in the Purchased Assets. Without limiting the
foregoing, the Contract and real property, the legal descriptions of which are
set forth in Exhibit "C" attached hereto, shall be transferred by the Trustee to
the Purchaser.
23. With the exception of the Tax Liens (and the liens of BNYFC if
BNYFC determines in its sole discretion to allow the purchase to be made subject
to its liens) all other persons and entities holding Liens with respect to the
Purchased Assets shall be, and hereby are,
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forever barred from asserting such Liens against the Purchased Assets, the
Purchaser, or its successors or assigns.
24. Any claim that the Trustee or the Debtors' estates have or may have
against BNYFC are hereby waived, released and discharged and such waiver,
release and discharge shall be binding on any successor to the Trustee and the
Debtors, including without limitation, any Trustee appointed under Chapter 7 of
the Bankruptcy Code and any party claiming through or on behalf of the estate.
Any claim which any professional retained in the proceedings has or may have
against BNYFC under Section 506(c) of the Bankruptcy Code or otherwise,
including but not limited to, theories of QUANTUM MERUIT, unjust enrichment or
similar theories which relate to the expense or action for the protection,
preservation, insurance, maintenance, operation, surrender or return of BNYFC's
collateral is hereby waived, released and discharged with respect to those
professionals who have executed and delivered releases in favor of BNFYC and
(ii) transferred, in their entirety, to the Contribution Fund (as defined in the
BNYFC Agreement) with respect to Ruden or any other professional who has not
executed and delivered a release in favor of BNYFC.
25. This Sale Order: (i) is and shall be effective as a determination
that, on the date of transfer of the Purchased Assets, all Liens with respect to
the Purchased Assets existing prior to the transfer have been unconditionally
released, discharged and terminated, and that the conveyance has been affected;
and (ii) is and shall be binding upon and govern the acts of all entities,
including without limitation, all filing agents, filing officers, title agents,
title companies, recorders of mortgages, recorders of deeds, registrars of
deeds, administrative agencies, governmental departments, secretaries of state,
officials and all other persons or
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entities who may be required by operation of law, the duties of their office, or
contract, to accept, file, register, record or otherwise release or issue, in
connection with such transfer, any documents or instruments, or who may be
required to report or insure any title or state of title in or to the Purchased
Assets.
26. Each and every federal, state and local government unit or
department be, and hereby is, directed to accept any and all documents and
instruments necessary and appropriate to consummate the transactions
contemplated by the Purchase Agreement.
27. This Court shall retain jurisdiction: (i) to enforce and implement
the terms and provisions of the Purchase Agreement, the Contribution Agreement
and each of the documents and instruments which must be executed in connection
therewith; (ii) to protect Purchaser against all Liens on Purchased Assets;
(iii) to compel delivery of the Purchased Assets to Purchaser; (iv) to resolve
any disputes related to the Asset Purchase Agreement, the BNYFC Agreement or the
assumption and assignment of executory contracts, unexpired leases and permits;
(v) to interpret, implement and enforce the provisions of the Purchase
Agreement, the BNYFC Agreement, the NRR Stipulation and this Sale Order; and
(vi) to approve the disposition of the funds remaining with the estate pursuant
to the BNYFC Agreement.
28. The terms and provisions of this Sale Order shall be binding in all
respects upon, and shall inure to the benefit of, the Trustee, the Debtors,
their respective estates, and their creditors, BNYFC, the Purchaser and its
respective successors and assigns, including, without limitation, any trustee
appointed for the Debtors in any superseding proceedings under Chapter 7 of the
Bankruptcy Code, and any affected third parties, including but not limited to,
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any landlord, lessor or mortgage holder asserting a claim or interest in any of
the Purchased Assets.
29. The failure specifically to include in this Order any particular
provisions of the Purchase Agreement, NRR Stipulation or the BNYFC Agreement
shall not diminish or impair the efficacy of such provision, it being the intent
of the Court that the Purchase Agreement, NRR Stipulation and the BNYFC
Agreement be authorized and approved in their entirety.
30. The Objection of NRR to the Sale Motion is withdrawn. The Objection
is settled pursuant to the terms of the NRR Stipulation.
31. As allowed by Bankruptcy Rule 8005, notwithstanding Bankruptcy Rule
7062, this Sale Order shall be effective and enforceable immediately upon entry.
DONE AND ORDERED in Chambers in Ft. Lauderdale, Florida on
June 23, 1999.
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HONORABLE RAYMOND B. RAY
UNITED STATES BANKRUPTCY JUDGE
Attorney Craig V. Rasile is
directed to serve conformed
copies of this Order upon
all interested parties.
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